The year before, the main building arm dragged the privately-owned Shepherd Group into loss after a stinging £15m shortfall.

Its problems then mainly stemmed from its Trinity Walk contract in Wakefield where the developer went bust and left the builder with heavy losses for the year.

Shepherd Construction played a key role in assembling a new consortium to complete the revised scheme, now reported to be on track to deliver good earnings over the next two years.

This year turnover at the construction business slipped 41% to £185m, depressed by market conditions and project slippage.

Profits were also hit by a £2.2m restructuring charge, which has seen staff numbers slide from around 900 to 700.

Mark Perkins, formerly chief executive of Shepherd Engineering Services, has been promoted to chief of the new Build Environment division, which now incorporates Construction, FM and SES trading activities.

Turnover was also down 14% at Shepherd Engineering Services in the year to June 2010. But the M&E firm managed a healthy profit of £2.5m, the second highest after last year’s record high of £3m.

The performance of the group as a whole was far better, as last year’s loss turned into a £16m profit.

But turnover fell from £697m to £527m due to reduced workloads at construction and building services contracting.

Alan Fletcher, group chairman, said: “There are fragile signs of recovery in some market sectors but these are patchy and the pace and timing remains unclear.

“Lower workload and increased competition in the construction sector continues to to affect margins at Shepherd Construction and at  SES.

“There have been signs of improvement in the property sector but conditions remain very difficult for Shepherd.”

Portakabin was once again the star performer within the group. In spite of a near 14% reduction in sales, pre-tax profits at the group’s industrial division reached £24m, with losses more than halved at the Park Homes business.

The group has succeeded in reducing gearing from an already modest 14.7% to just 0.9%.